What to Expect from Mondelēz’s 1Q18 Sales

Analysts expect Mondelēz (MDLZ) to sustain sales momentum in 1Q18. The company’s top line saw YoY (year-over-year) growth in the past two quarters after reporting declines in the past 15 quarters. As for 1Q18, analysts expect Mondelēz to report sales of $6.7 billion, up 4.0% on a YoY basis.

Mondelēz’s top line is expected to benefit from increased pricing in emerging markets. Plus, strength in power brands and continued growth in innovation-led new products are expected to support its sales growth rate. The company’s wellness product portfolio including Véa, belVita, and Good Thins bode well with the changing consumer preferences. Plus, the expanded distribution is expected to drive sales higher.

Regionally, Mondelēz’s top line is anticipated to benefit from improvement in the Europe and AMEA (Asia, the Middle East, and Africa) regions. However, softness in North America could remain a drag.

Mondelēz’s organic sales are projected to see a 1%–2% increase in 2018. Meanwhile, the net sales growth rate is expected to benefit from favorable currency rates, which are expected to contribute about 4.0% to its overall sales growth rate.

In comparison, sales for the company’s peers are also expected to improve driven by incremental sales from acquired brands. However, the rate of sales growth is likely to remain low as soft demand for packaged foods and tight inventory management by retailers could restrict the top-line growth rate.

Companies including Hershey (HSY), General Mills (GIS), Campbell Soup (CPB), Conagra Brands (CAG), and Kellogg (K) have expanded into fast-growing categories by acquiring in-demand brands to accelerate sales growth. However, weakness in traditional products continues to dent the top-line performance.